Corporate Reporting Raynair Group Case Study

Corporate Reporting Raynair Group 

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Introduction: Corporate Reporting Raynair Group

Corporate financial reporting is a crucial system of making financial reports that can be an income statement, balance sheet, or cash flow statement. Corporate financial reporting might be computed at the end of the month or the end of each quarter. The corporate financial reporting shows the financial position of the Ryanair Group, which was considered the biggest Airline group in 1984. The company operates more than 400 Boeing aircraft and uses the lowest fare to increase customer demand. In addition, sometimes higher oil prices and lower fares caused a wave of failures in the last year and that can directly affect an organization’s profitability.

1. Demonstration of financial analysis

In order to, financial statement analysis is a crucial financial metric that compares the current financial position. In order to, identify the net earnings of an organization's annual report is a useful option that is necessary to identify current financial health. In the financial year of 2020, the total profitability of the company also decreased by 11.73% due to increasing oil prices and the lowest ticket price which directly affected the financial health of Ryanair Group. The company expected annual growth can be increased by 33.17% by the financial year of 2024, due to opening more airports which is effective for business growth. The recruitment and training factors of the organization are successfully controlled by standard professionals and that creates millions of opportunities for local customers (Unerman et al. 2018). An entity with a financial statement has complied with the IFRS standards that make an explicit and unreserved statement.

The ongoing concern principles for IFRS are to identify the general features which are efficiently managing the ongoing financial health of the business and that efficiently represent the current financial health of the business. A number of similarities exist between US GAAP and IFRS guidance on financial statement presentation (Lewis and Young, 2019). In both sets of standards, financial statements include the following: a statement of financial position, a profit and loss statement (also called an income statement) and a statement of comprehensive income (one continuous statement or two consecutive statements), a cash flow statement and accompanying notes. When preparing financial statements, entities are required to take into consideration materiality and consistency, which are similar concepts in IFRS and US GAAP.

The aim and objectives of this study are to identify the effects of the earnings which are considered necessary compliance to disclose IFRS requirements on ERC (Earning Response Coefficient). The use of IFRS is necessary that ensure more transparency that explains how to transition from previous GAAP to IFRS standards which directly affected the entity reported. The biggest financial impact of the organization is identifying how to maximize the business facility. The revenue of the business organization is recognized after identifying the competition level directly affecting financial performance (Amosh and Mansor, 2018). An income statement, balance sheet, or cash flow statement is one form of corporate financial reporting.

Example 1

The illustrative financial statement of small business organizations has been used by XBRL and both are describe the comprehensive financial position of each company. Financial statements provide information about the performance and financial status of a business so that present or potential stakeholders can make informed financing decisions. Communication with customers is mainly handled through this channel.

Example 2

IFRS is using as an efficient monitoring tool that creates normal guidelines which help to improve the financial conditions in the decision-making process. Safety and efficiency always involve in the IFRS system and improve the social environment which is important to maximize more opportunities along with the future scope.

Example 3

In addition to creating financial reporting standards (also known as IFRS), the International Financial Reporting Standards Foundation oversees the formation of financial reporting standards. Its main objective is to develop and promote International Financial Reporting Standards (IFRS), such as accounting standards and sustainability standards, through the International Accounting Standards Board (IASB).

2. Detailed commentary on the company's financial health

Particulars	2021	2020	2019
Cash	-37.31%	-9.52%	-100.00%
Accounts receivable	25.00%	-28.00%	-100.00%
Inventory	150.00%	-46.67%	-100.00%
Prepaid expenses	40.00%	-80.95%	-100.00%
Other current asset	16.67%	-42.86%	-100.00%
Total current asset	1.37%	-31.53%	-100.00%
Proprietary and equipment	23.44%	-65.82%	-100.00%
Total assets	20.21%	-61.60%	-100.00%
Current liabilities	0.00%	12.50%	-100.00%
Long term liabilities	42.86%	-72.00%	-100.00%
Total liabilities	34.88%	-60.34%	-100.00%
Common stock	20.00%	-63.67%	-100.00%
Retained earning	-69.78%	-66.67%	-100.00%
Total shareholders’ equity	0.47%	-63.86%	-100.00%
Total liability and equity	20.21%	-61.60%	-100.00%
Income statement
Sales revenue	-30.00%	-21.43%	-100.00%
COGS	-26.15%	-27.08%	-100.00%
Gross profit	-46.67%	12.50%	-100.00%
Operating expenses	-50.00%	250.00%	-100.00%
Income from operations	-45.45%	-66.67%	-100.00%
Interest expenses	210.00%	-74.19%	-100.00%
Income before income tax expenses	-71.00%	-58.62%	-100.00%
Income tax expenses	-83.61%	0.00%	-100.00%
Net income	-65.47%	-70.83%	-100.00%

Table 1: Horizontal analysis

In order to capture the further growth of the business organization is mandatory and environmental efficiency also necessary to improves business performance. Apart from that, customer reward is also necessary to improve the financial structure of the business and individual travel agents are trying to attract customers by using some crucial methods which are generating 12.5% more revenue in the financial year of 2021. A comfortable workplace culture is also necessary to attract customers and the company can ensure every flight is maximizing traffic (Ryanair.com, 2022). Apart from that, the company publishes its monthly CO2 emission which is approximately £630 million including environmental taxes.

Particulars	2021	2020	2019
Cash	100.00%	62.69%	56.72%
Accounts receivable	100.00%	125.00%	90.00%
Inventory	100.00%	250.00%	133.33%
Prepaid expenses	100.00%	140.00%	26.67%
another current asset	100.00%	116.67%	66.67%
Total current asset	100.00%	101.37%	69.41%
Proprietary and equipment	100.00%	123.44%	42.19%
Total assets	100.00%	120.21%	46.16%
Current liabilities	100.00%	100.00%	112.50%
Long term liabilities	100.00%	142.86%	40.00%
Total liabilities	100.00%	134.88%	53.49%
Common stock	100.00%	120.00%	43.60%
Retained earning	100.00%	30.22%	10.07%
Total shareholders’ equity	100.00%	100.47%	36.31%
Total liability and equity	100.00%	120.21%	46.16%
Income statement
Sales revenue	100.00%	70.00%	55.00%
COGS	100.00%	73.85%	53.85%
Gross profit	100.00%	53.33%	60.00%
Operating expenses	100.00%	50.00%	175.00%
Income from operations	100.00%	54.55%	18.18%
Interest expenses	100.00%	310.00%	80.00%
Income before income tax expenses	100.00%	29.00%	12.00%
Income tax expenses	100.00%	16.39%	16.39%
Net income	100.00%	34.53%	10.07%

Table 2: Vertical analysis

In the year of 2021, the company decided to a committed plastic free zone which is effective to minimize the pollution level. According to the CO23 emission report, the company paid taxes of around £630 million and they collected the fees from the passengers by 50% along with the base fare of the flight tickets. In order to, during the same time, most of the companies are trying to identify the fuel investment which is 32% of the base fare of all passengers.

In order to, during the pandemic situation, Ryanair Group facing major issues and the number of passengers also decrease at the same time which is directly affected the financial health of the company. In the financial year of 2019, the company's financial health decreased by 39.32% which is hampering the efficiency rate of the company and passengers are not making any journey due to the lockdown which has been declared by the government. At the same time the company trying to improve workforce engagement through extensive series to meet employees' goals and objectives along with the increasing revenue level of the business (Schneider et al. 2018). Apart from that, Ryanair Group always tries to lead financial actions from the aviation industry to reaching out zero net carbon in 2050.

3. Research expenditure and development expenditure

Research expenditure is a fund that is spent to conduct particular research and that is always a nationally accepted method to evaluate annual funds on individual research activities. Scientific research allowed revenue and expenditure to develop scientific facilities to develop own business (Adegboyegun et al. 2020). In order to, identify the financial structures of the research evaluating the research fund is the effective way and which is related to business with the income tax treatment.

a) Terms research expenditure and development expenditure

Globally financial report of the individual company tries to involve some external party which is called investors to increase capital structure. The research development expenditure is the fund that depends on the different manner and which effectively reports financial information to keep evolving. On the other hand, the term development expenditure is incurred after approval of the research development plan for the operational development of depreciable assets. Apart from that, research and development expenditure is also necessary to identify the associated expenses which are directly used for the research and development purpose (Oberwallner et al. 2021). In addition, development expenditures are considered direct expenses of the company which are basically used for research design and enhancing its technological process.

b) Research development expenditure according to IAS 38

The IAS 38 paragraph 52 regulates the expenses associated with research and development of intangible assets. As stipulated in this paragraph, all research expenses associated with the generation of an intangible must be recognized as part of the results of the study. In order to, initial recognition is also mandatory to generate a sufficient cash flow position for the organization and can able to identify how to maximize the future benefits which are necessary for the business (Babajani and Adlzadeh, 2021). According to, IAS 138 research and development costs are incurred internally which are generated intangible assets that easily identify whether the company will generate expected cash flow in the future or not.

c) Discuss accounting standards relating to research and development expenditure

The research and development expenditure is necessary which is trying to involve standard accounting information which is necessary to identify how to maximize the financial performance. A standard accounting is necessary to identify how to maximize research and development arrangements which is necessary for the business (Hoffmann et al. 2020). A standard accounting method is also necessary to identify how to maximize the efficient structures of the business. The problem with research and development expenditures is that the future benefits associated with them are sufficiently uncertain that it is difficult to record them as an asset.

4. A conceptual framework for research reporting

a) Describe the term creative account

Creative account constantly identify how to accounting practices are required to follow some rules and regulations which is necessary to maximize future profitability. Most business organizations are trying to identify how to use creative accounts which is necessary. An accountant who is creative can always find bizarre and novel ways to manipulate figures in an organization's favour (Al-Hajaya and Sawan, 2018). Sometimes they twist the truth in order to give the impression that a company is successful and profitable. Investors may be misled if accounting gray areas are exploited, even if they result in misleading information.

b) Manipulate the financial statement to indulge creative accounting

The process of creative accounting, also known as aggressive accounting, involves manipulating financial numbers within the letter of the law and accounting standards, but it goes against their spirit and definitely does not provide a “true and fair” picture of a company as a financial statement should. As per the opinion of Diaz?Sarachaga (2021), the primary numbers in the financial statements are changed by many creative accounting techniques, which are evident in the notes to the accounts.

c) The Importance of a legal form of transaction and describe the feature

Money or its worth is what is involved in a transaction. The books of accounts must be updated whenever a business event measured in money is recorded. As well as transactions, events that change an enterprise's assets or equity, increase or decrease are also called transactions.

Conclusion

The revenue of the business organization is recognized after identifying the competition level directly affecting financial performance. Financial statements provide information about the performance and financial status of a business so that present or potential stakeholders can make informed financing decisions. Essentially, a transaction is when an enterprise's assets or equity change, either by increasing or decreasing.

References

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